Florida's AOB Reform: A Step Towards Insurance Fairness

Florida Senate Passes AOB Reform Bill

The Florida Senate has recently passed a bill aimed at reforming the state's insurance assignment of benefits (AOB) system. Governor Ron DeSantis has expressed his intention to sign the bill into law, marking a significant step towards addressing the longstanding issues with Florida's AOB system.

Understanding the AOB Crisis in Florida

An assignment of benefits (AOB) is a contract that allows third parties, such as contractors, medical providers, or auto repair shops, to bill an insurance company directly for services rendered to the policyholder. While this process is common and innocuous in many parts of the country, Florida's unique legal system has led to a crisis. The system richly rewards plaintiff's attorneys and vendors who submit inflated bills and file lawsuits when these bills are disputed. The numbers are staggering: from roughly 1,300 AOB lawsuits in 2000 to over 153,000 in 2018, a 94 percent increase in just five years.

Impact on Consumers and the Way Forward

The inflated claims and massive volumes of lawsuits have driven up insurance companies' legal costs, which are then passed on to consumers. A study estimates that Florida's auto and homeowners policyholders have paid about $2.5 billion more for insurance over the past dozen years to cover these increased legal costs. The new bill seeks to address this problem by reforming how AOBs can be executed and how plaintiff's attorneys can get paid for lawsuit settlements. If signed, the bill will come into effect on July 1, 2019.

For consumers, it is crucial to stay informed about these changes and understand how they might impact your insurance premiums and coverage. Always review your insurance policy thoroughly and consider consulting with an insurance professional to ensure you are adequately protected.